ESMT MBA 2015

QUANTITATIVE METHODS Özlem Bedre-Defolie ozlem.bedre@esmt.org

Pre-requisite to this course: none

This course is a pre-/co-requisite for: Operations Management

Purpose of the course Important decisions are rarely made by intuition alone. We need to use data to develop our insights and to support our analysis. Furthermore, we often need to develop simple models to structure our reasoning and to communicate our analysis in a defensible way to others. Ultimately we have to trust our intuition, but in refining our insight we generally seek to use data and models in the most coherent way. The basic objective of this course is to help you become more comfortable with simple quantitative methods. We shall discuss concepts that will enable you to understand topics such as corporate risk, market research and forecasting, which are encountered later in the programme. The aim of this course is to teach when a technique is appropriate and what it can achieve, leaving the computational aspects to the computer. The emphasis throughout the course is on concepts and reasoning, rather than technical details. G. B. Shaw once said that “all professions are conspiracies against the layman”, and it is certainly true that statisticians often appear to find the most difficult way to conclude the obvious. But do not despair, your Quantitative Methods (QUM) course will not be attempting to improve your ability to create confusion, although you may, from time to time, find inspiration in achieving that goal! Competencies developed The QUM course has three main learning objectives: • To acquire a body of quantitative knowledge, frameworks, and techniques most

widely used in business analysis

• To enhance the critical thinking, analysis and creativity skills, with particular focus on the application of quantitative frameworks to specific business settings such as marketing, finance, and human resources

You should acquire, or reacquire, some basic skills in data analysis, but more importantly, become a more informed and critical user of business quantitative analyses, as for example, might be undertaken by market researchers, consulting and financial analysts.

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Content The topics to be covered, with a specific business focus, include:

Descriptive statistics and the normal probability distribution

Analysis of sample data, including estimation, confidence intervals and hypothesis testing

Correlation and regression models

The optimal allocation of scarce resources Teaching methods

The course consists of classroom sessions, exercises in your study groups and PC workshops, as well as readings and exercises to be undertaken individually. Classroom sessions introduce ideas and approaches for tackling real-world problems. Practical PC workshops are conducted individually, and guidelines will be provided. The main software used will be Microsoft Excel. The course is built on a balance of quantitative and qualitative materials. All students are expected to read the teaching notes and cases before coming to class and be ready to discuss all aspects of the materials. Quantitative aspects will be studied in details in class. You will find all necessary materials on the eLearning platform, and an outline of sessions and preparation questions are provided in the following sections of this syllabus. You will need a simple handheld calculator for the exercise sessions. The following book, available in the library, provides additional material and details on concepts covered in the class: Wisniewski, M. (2009). Quantitative methods for decision makers, 5th ed. New York: Pearson Education. (Hereafter referenced as “Wisniewski.”)

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Participant evaluation The grade for the course has three components:

o Individual class preparation & participation (10%)

o Group assignment (40%)

o Individual final exam (50%)

Please be reminded of the ESMT Examination Rules and Study Book and your commitment in your Study Contract with ESMT. Cheating in exams or plagiarism of another’s academic or creative work (a class member or not) will be cause for dismissal. This includes the illicit use of internet sources about potential “solutions” for a case. Individual class preparation & participation (10%)

Sessions have assigned readings listed at the end of this course outline. You are required

to read the assigned readings. Participants will be graded based on constructive

contributions during the class discussion that enhance the quality of the learning

experience.

Final exam (50%)

The main purpose of the final exam is to assess the ability of applying the appropriate knowledge, frameworks, and quantitative methods that we discuss in class. The final exam is open-book and individual, and it will cover all aspects of the course. In preparation for the final exam, review sheets will be distributed with problems that will help you familiarize yourself with the quantitative tools that we learn in the class. The questions included in these sheets are along the lines of the questions that will comprise the final exam, and solving them will enhance your ability to apply the course material. While you are not required to submit written solutions, you are strongly encouraged to solve these questions. Detailed solutions to the review sheets will be available. Group assignment (40%)

The main purpose of group work in this course is to assess the critical thinking, analysis and creativity skills, as well as the ability of delivering effective written presentations. There is one group assignment for this course, which will be handed out and solved during Sessions 13 & 14 on Tuesday, March 17. This assignment involves solving a business case based on concepts from the course. You will work on the assignment together with your study group. Only one submission per group is required on the eLearning platform by 9:00am, Wednesday, March 18. During Session 15 on Thursday, March 19, some groups will present their solutions and we shall discuss the case in detail. Further information on the assignment will be provided in class.

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Pre-course preparation Session topic Quantitative analysis tools

This course will use extensive excel applications to analyze quantitative data. Please take the time to refresh yourself with basic excel functions and statistical applications using the material listed below.

Required reading: Ellis, P. (2011). MS Excel 2010 for business: the basics. LBS Technical Note.

This document goes with the excel file “Simple_functions_ in_Excel2010.xlsx” found on the eLearning platform.

Ellis, P. (2011). MS Excel 2010 for business: statistical applications. LBS Technical Note.

This document goes with the excel file “Height.xlsx” on the eLearning platform.

Course Sessions

Sessions 1 & 2 Thursday, February 26, 2015

09:00–12:00 Session topic Descriptive statistics. The normal distribution. Sampling

Required reading: Wisniewski, Chapter 4, p. 100-115. Chapter 7, p. 218-232.

Optional reading: Anderson, C. (2004). The long tail. Wired Magazine, October 2004. Accessible at http://www.wired.com/wired/archive/12.10/tail.html.

Wisniewski, Chapter 5, p. 173-185

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Sessions 3 & 4 Monday, March 2, 2015

09:00-12:00 Session topic Hypothesis testing. Workshop on sampling and inference

Required reading: Wisniewski, Chapter 7, p. 232-248.

Optional reading: Gelman, A. (2004). How can a poll of only 1,004 Americans represent 260 million people with only a three per cent margin of error? Scientific American, March 15, 2004. Available at http://www.scientificamerican.com/article.cfm?id=howcan-a-poll-of-only-100

Study questions Read the Sampling Exercise note (uploaded on e-learning), run the simulations described in the exercise, and answer the questions at the end.

Sessions 5 & 6 Thursday, March 5, 2015

09:00-12:00 Session topic Correlation and simple linear regression

Required reading: Regression analysis: basic concepts and methodology

Sessions 7 & 8 Friday, March 6, 2015

09:00-12:00 Session topic Residual analysis. Workshop on linear regression

Sessions 9 & 10 Wednesday, March 11, 2015

09:00-12:00 Session topic Multiple linear regression

Optional reading: Wisniewski, Chapter 10, p. 372-387.

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Sessions 11 & 12 Thursday, March 12, 2015

09:00-12:00 Session topic Workshop on multiple regression

Required reading: “Winner’s plc.”

Sessions 13 & 14 Tuesday, March 17, 2015

09:00–12:00 Session topic Group exercise

Preparation: Review all regression material.

Sessions 15 & 16 Thursday, March 19, 2015

09:00–12:00 Session topic Group presentations and discussion. Resource allocation.

Case (to prepare): London Business School (2009). Red Brand Canners. LBS Case.

Required reading: Wisniewski, Chapter 11, p. 410-430.

Study questions Attempt to answer the questions in the Red Brand Canners case.

Sessions 17 & 18 Wednesday, March 25, 2015

14:00–17:00 Session topic Applications of resource allocation

Sessions 19 & 20 Friday, March 27, 2015

09:00–12:00 Session topic FINAL EXAM

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Bibliography

Required Reading Ellis, P. (2011). MS Excel 2010 for business: the basics. LBS Technical Note. This document goes with the excel file “Simple_functions_ in_Excel2010.xlsx” found on the eLearning platform.

Ellis, P. (2011). MS Excel 2010 for business: statistical applications. LBS Technical Note. This document goes with the excel file “Height.xlsx” on the eLearning platform. Regression analysis: basic concepts and methodology Wisniewski, Chapter 4, p. 100-115, Chapter 7, p. 218-232. Wisniewski, Chapter 7, p. 232-248. Wisniewski, “Winner’s plc.”, Chapter 11, p. 410-430.

Optional Reading Anderson, C. (2004). The long tail. Wired Magazine, October 2004. Accessible at http://www.wired.com/wired/archive/12.10/tail.html

Wisniewski, Chapter 5, p. 173-185. Gelman, A. (2004). How can a poll of only 1,004 Americans represent 260 million people with only a three per cent margin of error? Scientific American, March 15, 2004. Available at http://www.scientificamerican.com/article.cfm?id=howcan-a-poll-of-only-100 Wisniewski, Chapter 10, p. 372-387.